All posts tagged ecb

As European Union member states and the European Parliament rush to agree on the terms under which the European Central Bank can take over banking supervision in the euro zone, the 10 (soon 11) non-euro EU countries face a big decision: Should they submit their own lenders to centralized scrutiny even though it won’t give them access to aid from the currency union’s bailout fund?

Zsolt Darvas and Guntram Wolff, researchers at Brussels-based think tank Bruegel, say yes, “non-euro EU members should stand ready to join the Single Supervisory Mechanism.” In a paper originally prepared for lawmakers in Denmark, one of the countries that will soon have to make this call, Messrs. Darvas and Wolff carefully lay out the pros and cons of joining the new supervisory regime. Read More »

Talks between the European Parliament and member states on giving the European Central Bank new powers to police euro-zone banks are moving like molasses through the EU’s legislative machinery, meaning a March kick-off date for the bank watchdog could be missed.

“The timetable is sliding because negotiations are going on in a rather slow process,” said Sven Giegold of the Green Party, who’s in charge of one of the files linked to the banking supervisor. “It’s clear that we will not have an agreement before the end of January.”

Coming to an agreement in the Council had already been difficult. The 17 euro states were at odds on many of the key issues, such as what banks should be supervised directly by the ECB, and they also had to accommodate non-euro states that may want to join the new regime as well as the U.K., which had no interest in signing up but feared that it could be outvoted on other banking matters. (A summary of the finance ministers’ deal sealed just before the holidays can be found here.) Read More »

Just before 5 a.m. Thursday morning, European Union finance ministers agreed on the framework for a new, powerful policeman for banks in the euro zone and other countries that want to participate. In case you were asleep at the time, here are answers to some of the most important questions:

What will the new banking supervisor do? The new supervisor, which will be under the auspices of the European Central Bank, is supposed to catch weaknesses in lenders before they lead to the financial disasters that have already taken down Ireland, Cyprus and Spain. It will be able to give out and withdraw bank licenses, request lenders to boost their capital buffers and restrict risky lending practices.

Which countries will be part of the new supervisory regime? All 17 euro countries are automatically part of it, the other 10 EU members can join if they want to. The U.K., Sweden and the Czech Republic have already bowed out; it’s still unclear how many of the others will sign up. Read More »

It’s a quiet day in Brussels. The Nov. 1 bank holiday means many have decided to faire le pont and make a long weekend of it. Half-term means schools are out and the European Commission isn’t holding a midday briefing. Only one thing mars this tranquil mood: the knock-down, drag-out inter-institutional fight over gender and the European Central Bank Executive Board appointment, which members of the European Parliament decided to deepen today.

Dow Jones FXTrader reported on Wednesday that the European Council will confirm Luxembourg Central Bank Governor Yves Mersch to the ECB on Monday via a written procedure, despite the negative opinion given by the European Parliament in Strasbourg last week. The only thing which could bar this is a last-minute objection from a member state.

“It’s obviously a trick to try and do this via a written procedure on a long weekend,” MEP Sylvie Goulard from the ALDE liberal democrats said in a conference call Friday. “If one member state disagrees with the written procedure it can be stopped… We are trying get people in several capitals to take this seriously.” Read More »

Covering the euro-zone crisis is often surreal. But seldom as much as when you hear a senior official liken banking supervision to love. But let’s take things from the start.

Much of the debate behind closed doors in Brussels and Frankfurt these days is about the single banking supervisor — an agency of/under the European Central Bank that will police the currency bloc’s banks. The details of this first step towards a banking union are being negotiated right now, but one thing that makes it interesting is that its creation and effective operation is a prerequisite for the euro-zone bailout fund to rescue banks directly.

The key word here is “effective.” It’s not enough for this new institution to be designed, legislated, set up. It needs, euro-zone leaders agreed back in June, to be effective. That’s so the bailout fund–the European Stability Mechanism–can trust that the banks it’s saving don’t blow up in its face or on its balance sheet. Read More »

Oct. 22 is date night. Finally, Luxembourg Central Bank governor Yves Mersch will get to sit down with the European Parliament’s Economic and Monetary Affairs Committee (ECON) for an intimate soirée in Strasbourg. It won’t be all hearts and flowers though. The meeting is the latest step in a saga of gender-based internecine strife among the European institutions and the atmosphere will likely be tense.

ECB fans will know the parliament has been delaying Mr. Mersch’s appointment due to long-standing demands for a more gender-balanced governing council at the central bank. It’s currently 22 men – with no change in sight. But although they have now agreed on a date for the hearing, the drama has shifted to the committee itself–and there could yet be hiccups on the way to mustachioed Mr. Mersch’s appointment.

When Messrs Buchheit and Gulati write papers about the euro zone, we take note. Lee Buchheit, of the law firm Cleary Gottlieb Steen & Hamilton, was the man in charge of the Greek sovereign-debt restructuring this past March, working for the Greek government. Mitu Gulati is his intellectual partner, a law professor at Duke University and one of the pundits who helped explain that messy Greek restructuring.

In their latest paper on the euro zone–a short note published on Tuesday–the two go through the options that euro-zone states facing debt pressures have. The preferred scenario arising from their analysis is that their best option would be to re-profile their debt by extending maturities.

Messrs Buchheit and Gulati present five options available to countries in imminent distress (mainly Cyprus, Italy and Spain, with Spain being the one immediately affected.) Read More »

Every great soap opera has a special episode where the cast take the drama to an exotic location to spice things up. The smooth glass-and-steel curves of the European Parliament’s riverside Strasbourg seat and crisply-chilled subsidized champagne are therefore the perfect ingredients for the next installment for the next episode of EP vs. ECB.

This week, Sharon and her friends, including Dior-clad controversy magnet Rachida Dati, have held up the appointment of mustachio’d Luxembourger Yves Mersch to the European Central Bank executive board, in a thrilling subplot to the EU’s Super Wednesday. Read on for Real Time Strasbourg drama… Read More »

The European Commission presents its proposal for the European Central Bank to take on the role of euro-zone bank supervisor on Wednesday–but some officials In Brussels are already skeptical the new arrangement will be in place in time to meet its mid-2013 target date.

The proposal’s timeline is under threat because of European Parliament efforts to seek to influence political negotiations, despite efforts by member states to shut it out from decision-making.

The parliament’s economics committee claims the Commission’s proposal, which has been widely leaked, is not ambitious enough and does too little to set up checks and balances for the ECB in its new role.

Members of the parliament are also worried that, since all 27 member states have to unanimously agree on the Commission’s proposal, nations will end up watering down the scope of the central authority.

This stand-off with the parliament threatens the timing of the plan to allow banks direct access to the euro-zone’s bailout funds. Read More »

Now, a closed-door meeting has prompted a display of cattiness among the parliament’s economic and monetary affairs committee, with one French lawmaker comparing the hearing to a sexy bikini…. Read More »

About Real Time Brussels

The Wall Street Journal’s Brussels blog is produced by the Brussels bureau of The Wall Street Journal and Dow Jones Newswires. The bureau has been headed since 2009 by Stephen Fidler, who was previously a correspondent and editor for the Financial Times and Reuters. Also posting regularly: Matthew Dalton, Viktoria Dendrinou, Tom Fairless, Naftali Bendavid, Laurence Norman, Gabriele Steinhauser and Valentina Pop.